Mt Hawley Insurance Company V Legacy Protection Intelligence Agency

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 24-22555-CIV-MARTINEZ/SANCHEZ
MT. HAWLEY INSURANCE COMPANY,
Plaintiff,
v.
LEGACY PROTECTION & INTELLIGENCE
AGENCY, LLC, et. al.,

Defendants.
_______________________________________/
REPORT AND RECOMMENDATION ON MT. HAWLEY’S
MOTION FOR ENTRY OF FINAL DEFAULT JUDGMENT

This matter is before the Court on Plaintiff Mt. Hawley Insurance Company’s (“Mt.
Hawley”) Motion for Entry of Final Default Judgment Against Defendant Legacy Protection &
Intelligence Agency, LLC (“Legacy”). ECF No. 50.1 Defendant Legacy did not respond to the
Complaint (ECF No. 1), to Mt. Hawley’s Motion for Entry of Clerk’s Default (ECF No. 47), or to
the instant motion, and the deadlines to do so have long passed. After careful consideration of Mt.
Hawley’s filings, the record, the applicable law, and being otherwise fully advised in the premises,
the undersigned RESPECTFULLY RECOMMENDS that Mt. Hawley’s Motion for Entry of
Final Default Judgment Against Legacy, ECF No. 50, be DENIED WITHOUT PREJUDICE.
I. BACKGROUND2
Mt. Hawley seeks a declaratory judgment that it has to no duty to defend or indemnify

1 The Honorable Jose E. Martinez, United States District Judge, referred this matter to the
undersigned for a Report and Recommendation. See ECF No. 51.
2 The following facts are deemed admitted with respect to Legacy by virtue of the default. See
Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987).
Legacy under its commercial general liability insurance policy in connection with an underlying
state tort case in which Defendants Raymond Ortega and Antonio Llerena obtained a jury verdict
of $1,195,450 against Legacy. ECF No. 1 at ¶¶ 2, 39; see Ortega v. Burger King Corp., Case No.
2019-006042-CA-01 (Fla. 11th Cir. Ct.) (the “State Court Litigation”). The complaint in the State

Court Litigation involved allegations of an attack on Defendants Ortega and Llerena at a Burger
King restaurant in Miami Beach, Florida by a security guard employed by Legacy, who provided
security services at that Burger King. See ECF No. 1 at 16-25; ECF No. 1-1 at ¶¶ 6, 8, 12-13, 19-
23.
Although Mt. Hawley had issued a commercial general liability insurance policy to Legacy
for a coverage period that included the date of the attack that was the subject of the State Court
Litigation, see ECF No. 1 at ¶ 41, Mt. Hawley contends that the Abuse or Molestation Exclusion
and the Discrimination Exclusion contained within that policy bar any coverage obligations in
connection with the State Court Litigation and relieve Mt. Hawley of any duty to defend or
indemnify Defendants in this case, id. at ¶¶ 43-44, 48-55; ECF No. 50 at ¶ 2.

Although Mt. Hawley served Legacy with the summons and complaint via the Florida
Secretary of State (ECF No. 45), Legacy did not respond to the complaint or otherwise appear in
this case. Accordingly, the Clerk entered default against Legacy. ECF No. 47. Mt. Hawley then
filed the instant motion. ECF No. 50.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 55 contains a two-step process by which a party may obtain
a final default judgment. Fed. R. Civ. P. 55. For any defendant that fails to plead or otherwise
defend against a lawsuit, the clerk may enter a clerk’s default. Fed. R. Civ. P. 55(a). Thereafter,
“[p]ursuant to Federal Rule of Civil Procedure 55(b)(2), the Court is authorized to enter a final
judgment of default against a party who has failed to plead in response to a complaint.” Chanel,
Inc. v. Sea Hero, 234 F. Supp. 3d 1255, 1258 (S.D. Fla. 2016).
A clerk’s entry of default, however, does not automatically entitle a plaintiff to a default
judgment. See, e.g., Cohan v. Baby Marathon, LLC, No. 20-60185-CIV-WILLIAMS/VALLE,
2020 WL 6731041, at *1 (S.D. Fla. Oct. 27, 2020) (explaining that a motion for default judgment

“is not granted as a matter of right”), report and recommendation adopted, 2020 WL 6729393
(S.D. Fla. Nov. 16, 2020). While it is true that a defendant who defaults admits the well-pleaded
allegations of fact in the complaint, a defaulting defendant does not admit any facts that are pleaded
insufficiently or are mere conclusions of law. Id.; see also, e.g., Nishimatsu Constr. Co. v. Houston
Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975); De Lotta v. Dezenzo’s Italian Rest., Inc., No.
6:08-cv-2033-Orl-22KRS, 2009 WL 4349806, at *5 (M.D. Fla. Nov. 24, 2009) (explaining that
the pleading standard set forth in Ashcroft v. Iqbal, 556 U.S. 662 (2009), “is equally applicable to
a motion for default judgment”). Accordingly, an admission of the allegations in the complaint,
by itself, may or may not be sufficient to grant default judgment. See Descent v. Kolitsidas, 396
F. Supp. 2d 1315, 1316 (M.D. Fla. 2005) (“[T]he defendants’ default notwithstanding, the plaintiff

is entitled to a default judgment only if the complaint states a claim for relief.”); see also Surtain
v. Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir. 2015).
III. ANALYSIS
In the instant motion, Mt. Hawley seeks a default final judgment against Legacy on Mt.
Hawley’s claims for declaratory relief. ECF No. 50. Although a default judgment may generally
be entered against a party for failing to plead or otherwise respond to a complaint, including a
complaint seeking declaratory relief as to the duty to indemnify or defend under an insurance
policy, see, e.g., Sea Hero, 234 F. Supp. 3d at 1258; Progressive Express Ins. Co. v. C&F Transp.,
LLC, No. 1:22-CV-20775, 2022 WL 17583749, at *3 (S.D. Fla. Oct. 13, 2022), “in certain
circumstances a default judgment is inappropriate if it results in inconsistency among judgments.”
Rodriguez v. Guacamole’s Authentic Mexican Food & More, LLC, No. 11-62527-CIV, 2012 WL
718688, at *2 (S.D. Fla. Mar. 6, 2012) (quoting Marshall & Ilsley Trust Co. v. Pate, 819 F.2d 806,
811 (7th Cir. 1987)).
“The general rule, derived from the seminal case of Frow v. De La Vega, 82 U.S. 552

(1872), is that when one of several defendants who is alleged to be jointly liable defaults, judgment
should not be entered against that defendant until the matter has been adjudicated with regard to
all defendants, or all defendants have defaulted.” Mayorga v. Stamp Concrete & Pavers, Inc., No.
13-81274-CIV, 2015 WL 3556972, at *2 (S.D. Fla. June 4, 2015) (internal quotations omitted).
“The Eleventh Circuit has applied this same principle to cases where defendants are jointly and
severally liable, as well as where defendants have closely related defenses.” Tan v. Sushi Yama
Japanese Rest., Inc., No. 20-20679-CIV, 2020 WL 6293216, at *4 (S.D. Fla. Aug. 4, 2020) (citing
Gulf Coast Fans, Inc. v. Midwest Elecs. Imps., Inc., 740 F.2d 1499, 1512 (11th Cir. 1984) (“[E]ven
when defendants are similarly situated, but not jointly liable, judgment should not be entered
against a defaulting defendant if the other defendant prevails on the merits.”)), report and

recommendation adopted, 2020 WL 6290345 (S.D. Fla. Oct. 27, 2020). Courts, moreover,
routinely apply this principle in declaratory judgment actions that seek the same declaratory relief
concerning coverage under an insurance policy against both defaulting and non-defaulting
defendants. See, e.g., Progressive Express Ins. Co., 2022 WL 17583749, at *4-5; Infinity Auto Ins.
Co. v. MD Royal Grp., LLC, No. 21-CV-20868-PCH, 2021 WL 11594309, at *2 (S.D. Fla. Oct.
27, 2021); Mt. Hawley Ins. Co. v. L’Excellence Condo. Ass’n, Inc., No. 19-21742-CIV, 2019 WL
8955104, at *2 (S.D. Fla. Nov. 27, 2019).
Mt. Hawley nonetheless argues that the Frow rule does not apply to this case because
Plaintiff is not seeking monetary damages against Legacy. ECF No. 50 at ¶ 13. Plaintiff’s
argument is unavailing. Regardless of whether damages are sought, default judgment should not
be entered when doing so can result in inconsistent judgments. See, e.g., Gulf Coast Fans, Inc.,
740 F.2d at 1512; Geico Gen. Ins. Co. v. Gonalez, No. 20-21549-CIV, 2020 WL 5217184, at *2
(S.D. Fla. Aug. 7, 2020) (concluding that motion for default judgment should be denied without

prejudice pending final disposition of claims against other defendants to guard against the
possibility of inconsistent judgments), report and recommendation adopted, 2020 WL 5216770
(S.D. Fla. Sept. 1, 2020); see also Progressive Express Ins. Co., 2022 WL 17583749, at *4-5;
Infinity Auto Ins., 2021 WL 11594309, at *2); L’Excellence Condo. Ass’n, 2019 WL 8955104, at
*2. Contrary to Mt. Hawley’s argument, the practice of withholding the entry of default judgment
in a multi-defendant case in which there are non-defaulting defendants is particularly appropriate
“when, as here, the case involves the declaration of obligations and coverage under an insurance
agreement that is the subject of an underlying dispute.” N. Pointe Ins. Co. v. Glob. Roofing &
Sheet Metal, Inc., No. 6:12-CV-476-ORL-31, 2012 WL 5378826, at *4 (M.D. Fla. Sept. 4, 2012),
report and recommendation adopted, 2012 WL 5378740 (M.D. Fla. Oct. 31, 2012); see also Glob.

Aerospace, Inc. v. Platinum Jet Mgmt., LLC, No. 09-60756-CIV, 2009 WL 3400519, at *5 (S.D.
Fla. Oct. 20, 2009) (“[C]ourts routinely withhold default judgments declaring that an insurance
policy is inapplicable until the claims against the defendants who appear in the action are
adjudicated.”).
Here, although it is true that Legacy is in default, Defendants Ortega and Llerena appeared
in this case and timely filed an answer to the complaint and, subsequently, an amended answer.
ECF Nos. 19, 30. Indeed, they have asserted defenses and counterclaims that are at odds with the
default judgment that Mt. Hawley seeks against Legacy, and among the bases for those defenses
and counterclaims, Defendants Ortega and Llerena have asserted that they are assignees of all of
Legacy’s rights, title, claims, and interests in the insurance policy that Mt. Hawley issued to
Legacy. See ECF Nos. 19, 30; see also ECF No. 58. Significantly, Defendants Ortega and
Llerena’s defenses and counterclaims, as well as Mt. Hawley’s claims against Ortega and Llerena,
remain pending before this Court and are intertwined with the determination of Mt. Hawley’s

claims against Legacy. See ECF Nos. 43, 58; see also ECF Nos. 1, 30. Moreover, the central issue
in this case—whether the insurance policy covers the acts at issue in the State Court Litigation—
applies equally to all of the defendants, whether defaulting or non-defaulting. As a result of these
circumstances, the entry of a default judgment against Legacy would create a very real possibility
of inconsistent judgments should Defendants Ortega and Llerena prevail at a later stage of this
litigation, and that risk of inconsistent judgments is just reason for delaying the entry of default
judgment against Legacy. See, e.g., Robinson v. G.C.L. Constr., Inc., No. 0:17-CV-60084-KMM,
2017 WL 11726375, at *3-4 (S.D. Fla. Apr. 25, 2017); Fed. R. Civ. P. 54 (b) (“When an action
presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-
party claim—or when multiple parties are involved, the court may direct entry of a final judgment

as to one or more, but fewer than all, claims or parties only if the court expressly determines that
there is no just reason for delay.”) (emphasis added).
IV. CONCLUSION
For the foregoing reasons, the undersigned RESPECTFULLY RECOMMENDS that Mt.
Hawley’s Motion for Entry of Final Default Judgment against Legacy, ECF No. 14, be DENIED
WITHOUT PREJUDICE pending final disposition or other resolution of both the claims asserted
against the non-defaulted defendants, Raymond Ortega and Antonio Llerena, and the
counterclaims asserted by the non-defaulted defendants against Mt. Hawley.
Within fourteen (14) days from the date of receipt of this Report and Recommendation, the
parties shall serve and file written objections, if any, to this Report and Recommendation with the
Honorable Jose E. Martinez, United States District Judge. Failing to file timely objections will
bar a de novo determination by the District Judge of any issue addressed in the Report and
Recommendation, will constitute a waiver of a party’s “right to challenge on appeal the district
court’s order based on unobjected-to factual and legal conclusions,” and will only allow appellate
review of the district court order “for plain error if necessary in the interests of justice.” 11th Cir.
R. 3-1; 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Henley v. Johnson, 885 F.2d
790, 794 (11th Cir. 1989); see also Harrigan v. Metro-Dade Police Dept Station #4, 977 F.3d
1185, 1191-92 (11th Cir. 2020).
RESPECTFULLY RECOMMENDED in Chambers in Miami, Florida, this 24th day of
June 2025.
dace
UNITED STATES MAGISTRATE JUDGE
ce: Hon. Jose E. Martinez
Counsel of Record